In the Loop: Biodiversity acoustics, ESG in Japan and nature proposals

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The sound of biodiversity

(Source: Getty)

The power of sound has become part of some investors’ toolkits in the search for ways to measure biodiversity.

Last year, Responsible Investor reported that Cardano, Fidelity International and Nomura Asset Management commissioned French start-up Green Praxis to develop a new way to measure biodiversity.

The pilot study used recording devices to assess the biodiversity across different land uses of a palm oil company in Indonesia, including places of non-intensive production, intensive production, reforested land and conservation areas.

The investors recently published the results of the study, which found that the conservation areas and production plots produced notably different acoustic landscapes.

Production plots were dominated by monotonous insect activity, primarily cicadas, and no mammals were detected. The absence of gibbons in plots “is a very important indicator of the degraded state of agricultural areas since primates play vital roles in ecosystem structure, function, and resilience”.

In contrast, conservation and control plots were populated by varying bird species, frogs and mammals – including gibbons.

Discussions with a second palm oil producer are already underway. The investors aim to use the combined results to encourage companies and their suppliers to incorporate this technology into their own biodiversity monitoring processes.

The week in RI

Investor engagement was in focus this week, in the run-up to and after Shell’s chaotic AGM on Tuesday, which saw around 20 percent of investors support a Follow This proposal on Paris-aligned emissions.

On Wednesday, the Church of England’s Adam Matthews said that CA100+ should no longer prioritise engagement with oil and gas companies. He explained that their focus on short term profits meant a “fundamental break” with the long-term focus of pension funds.

Separately, another investor group is gearing up to engage with oil and gas companies on the Just Transition.

Also this week, more departures from the Net-Zero Insurance Alliance were confirmed. In a big blow to the initiative, its chair AXA left, as well as founding member Allianz.

Quote of the week

“People feel that they need to learn how to programme and that they need to read all thousands of pages in order to use [the EU taxonomy], and my key message today is that no you don’t – we are going to facilitate the use to you, we are going to provide you with the ‘Microsoft Office package’”

Don’t fret about the EU taxonomy: Helena Viñes Fiestas, chair of the EU’s Platform on Sustainable Finance, says a full suite of implementation tools will be made available

From Tokyo, with thanks!

A big thank you to everyone who helped to make RI Japan a great success this week. Nearly 700 people attended the 12th edition of the event – including, as one attendee put it, “pretty much everyone in sustainable finance in Tokyo”.

The agenda featured speakers from GPIF, the Ministry of the Environment, the FSA, Japan PRI, GFANZ and many more.

ESG is clearly a very hot topic in Japan right now, and key focus areas included transition finance, human rights, diversity and inclusion – and, of course, standard setting, data and disclosure.

We were particularly excited to hear that PRI in Person in October will now be part of a wider Tokyo Climate Week. RI will definitely be there!

In the meantime, look out next week for a longer write-up of RI Japan, along with an overview of some of the exciting developments in the Japanese market.

Biodiversity proposals rare breed at AGMs

Biodiversity and nature have shot up the agenda of investors in recent years, but the topic has not yet become a prominent feature at AGMs.

Analysis by Planet Tracker shows that between 2010 to the end of 2022, only 38 proposals on the topic have emerged – the majority of which focused on deforestation, followed by genetics, with only a handful explicitly referencing biodiversity or nature.

And a follow-up study published this week shows that when proposals were filed, investors were relatively unsupportive. Planet Tracker said that of the 26,500 votes cast on biodiversity proposals in the same period, 62 percent votes were either cast against or the voter abstained or simply did not vote.

Of the funds that disclosed the rationale for voting against, reasons included that the proxy was overly prescriptive, the company already reports on biodiversity, insufficient shareholder benefits and the company already had a relevant policy.

“It will be disheartening if more biodiversity-related proposals are not passed in 2023,” said Planet Tracker.

Several investors contacted by RI agreed voting items and shareholder resolutions are rare, but this is expected to change.

Some flagged that “Say on Nature” votes – similar to such efforts on climate and pay – are starting to emerge at French companies, and could become more prominent.

We’d be keen to hear more investor views on the current and future place of biodiversity shareholder resolutions, as well as the potential for “Say on Nature” – please send your thoughts our way.

Coming up next week

Next Wednesday (31 May), the Institute of Finance and Financial Regulation and the European Bank for Reconstruction and Development are holding a half-day virtual conference on sustainable finance.

RI is a media partner for the event, which is running for the third year and is titled “ESG for banks, firms and institutional investors: challenges and opportunities”.

Tune in at 5pm UK time to hear our editor Lucy Fitzgeorge-Parker interviewing the CEO of the Greek Growth Fund, Gregory Dimitriadis, about the challenges of implementing ESG in state-owned companies.

Today’s letter was prepared by the RI editorial team.